Credit growth in Vietnam has reached 11.24 per cent, its highest ever point, Prime Minister Nguyen Xuan Phuc revealed during the second session of the National Assembly (NA) on October 20.

In regard to the banking and finance sector, PM Phuc said that bad debts in recent times have been settled to improve credit quality and ensure liquidity and safety in the system.

Some financial institutions continued to lower interest rates by 0.5 to 1.5 per cent, in particular large commercial banks such as BIDV, VietinBank, Vietcombank, and Agribank, among others.

Vietcombank cut its short-term interest rate for five prioritized sectors and startups to 6 per cent per annum (down 1-2 per cent per annum), BIDV cut 1 per cent off its interest rates for prioritized sectors, while the Lien Viet Post Commercial Bank lowered its interest rates by 1 to 1.5 per cent per annum.

Stability was ensured in exchange rates, foreign exchange markets, and gold markets. Foreign exchange reserves now stand at more than $40 billion, their highest point ever.

Regarding the national budget, the Prime Minister asked for tighter management, prevention of transfer pricing, lowering outstanding loans, and savings in spending. Total national budget revenue in the first nine months of the year reached 70.8 per cent of the plan, with revenue for 2016 as a whole now estimated to surpass the goal by 2.4 per cent while the budget deficit is to be kept equal to the rate the NA has previously ratified (in absolute value).

Capital mobilization for development and investment has been strengthened. In the first nine months disbursement of FDI capital was up 12.4 per cent while disbursement of ODA and preferential loans totaled $2.7 billion.

Stock market capitalization reached 63 per cent of GDP, the highest to date. FDI increased dramatically, with total ODA and preferred loans signed in the first nine months reaching nearly $5 billion, up 1.8 per cent year-on-year. Total social investment in 2016 is estimated to reach 32.5 per cent of GDP, 1 per cent higher than the annual plan of 31.5 per cent.

Reform of financial institutions has been carried out vigorously, especially at poor financial institutions. As at the end of August, the bad debt ratio in the entire banking system was 2.66 per cent, according to the State Bank of Vietnam.

Vietnam’s public debt has been among the top issues on the government’s agenda as it has already exceeded the mark set by the NA of 65 per cent of GDP. The Ministry of Planning and Investment, in its latest report released last month, issued a warning that the risk of public debt climbing beyond the ceiling was becoming “more apparent”.

Despite the looming risk that Vietnam may not be able to reach its GDP target this year, PM Phuc said the government is maintaining its GDP target for 2017 at 6.7 per cent.